Statement I: Water is a polar molecule
Statement II: Water has polar covalent bonds
 (A) Statement 1 is correct
 (B) Statement 2 is correct
 (C) Statement 1 is correct but statement 2 is not correct
 (D) Statement 1 is not correct but statement 2 is correct
 (E) Both the statement 1 and statement 2 is correct

Hint: Polarity and the nature of bonds in water molecules can be explained in terms of electronegativity difference and the shape of molecules. The electronegativity difference in water molecules causes the electrons to stay closer to the oxygen atom giving it a slight negative charge and the hydrogen atoms have a slight positive charge.

Complete step by step answer:
- Let's start with the concept of polarity of molecules. A molecule or a chemical species is said to be polar, when the positive and negative electrical charges are unevenly distributed in the molecule. The electrons supply the negative charge and the positive charge comes from the atomic nucleus and the movement of electrons determines the polarity of the molecule.
- As we know a water molecule consists of two hydrogen atoms and one oxygen atom (${{H}_{2}}O$). The shape of the water molecule is bent and this shape means that the positive charge of the hydrogen atoms is on the other side of the molecule and most of the negative charge from the oxygen on the other side of the molecule. Hence, we can say that the water molecule is polar and thus statement 1 is correct.
- The more likely atoms will form a covalent bond, if the difference between electronegativity values is smaller and ionic bonds usually have large differences between electronegativity values. When the electronegativities of hydrogen and oxygen are compared, we can see that oxygen is more electronegative with the value of 3.5 than hydrogen whose value is 2.1. Since the difference is small, they form a polar covalent chemical bond. Hence the statement 2 is also correct.
Therefore, the answer is option (E), i.e. both the given statements are correct.

Note: It should be noted that even though the covalent bond between oxygen and hydrogen in water is of polar nature, in overall a water molecule is an electrically neutral molecule. This is because, each water molecule has ten electrons and ten protons thus making a net charge of zero and electrically neutral.